Report on kickbacks in the US ad industry out next month could lead to 'jail time'

A bombshell trade report lands next month which will reveal whether US advertising agencies accept rebates from media companies, and whether those agencies are transparent about disclosing them and passing them back to their clients, according to sources.

The report, commissioned by advertiser trade body the Association of National Advertisers (ANA), is set to be more "explosive" than many people in the industry were prepared for, these sources say, because it will lay bare the practices media agencies use to make hidden margins on their advertising buys. A previous report on the same issues from the ANA, published in 2012, was widely ignored.

The new findings are set to make many marketers sit up and take notice. Ad agency contracts generally say that client money should be spent transparently and honestly. Any indication that cash is instead being siphoned into schemes that only benefit agencies will cause trouble.

One source, who is aware of the report's findings, says there have been suggestions of the possibility of "jail time" for executives found to have been deliberately in breach of their contracts.

Why this is an issue

Media agencies are paid by advertisers to secure them the best and most efficiently priced advertising slots.

However, one of the issues is whether buying agencies are actually securing the most strategic slots for advertisers, or whether they've made a previous agreement with a media owner to spend a set amount of their clients' ad dollars in order to receive a rebate.